The Supreme Courtroom on Tuesday (September 1) acquitted a former Indian Financial institution Department Supervisor in a 1991 mortgage fraud case, holding that the CBI failed miserably not solely in proving the allegations but in addition in correctly framing the case, which the Courtroom described as “fabricated” and having “no legs to face.”
“The CBI has failed miserably in not solely proving its case but in addition in framing the case.”, the Courtroom mentioned, whereas additionally calling for a report from the Indian Financial institution’s Anna Nagar Chennai Department Supervisor for holding the surplus cash acquired by them in public sale after satisfying the mortgage account. The Courtroom expressed concern over the truth that the financial institution had apparently retained the excess quantity as an alternative of disbursing it to the individuals legally entitled to it.
“…we’re involved as to how the Indian Financial institution saved the surplus cash in public sale acquired by them, with out disbursal to the authorized heirs, even when the predecessors-in-interest had been arrayed as accused on this case….”, noticed a bench of Justice J.B. Pardiwala and Justice Okay. Vinod Chandran.
“Having discovered the case to be totally fabricated, we name for a report from the Department Supervisor, Indian Financial institution, Anna Nagar Department, who’s impleaded herein as a respondent with regard to the mortgage accounts that are the subject material of this case booked by the CBI and the satisfaction of the identical as additionally utilisation of the cash acquired on public sale sale of the mortgaged properties.”, the courtroom ordered.
The case associated to loans sanctioned in 1991 when the Appellant (A1) was serving as Department Supervisor on the Indian Financial institution’s Anna Nagar Department.
The CBI alleged that the Appellant had colluded with A2, a retired officer of Indian Abroad Financial institution, to sanction loans in favour of A4 and A5, who had been allegedly getting used as fronts for A2.
An FIR was registered towards the Appellant underneath Part 420 of the Indian Penal Code, 18601 learn with Part 120B and Part 13(2) learn with 13(1)(d) of the Prevention of Corruption Act, 1988.
In accordance with the prosecution, A4, who labored as a washerman at A2’s residence, was projected as an actual property businessman and was sanctioned a mortgage of ₹13.50 lakh. One other mortgage of ₹10 lakh was sanctioned to A5 for buying 21.39 acres of land.
The prosecution additional alleged that the loans had been illegally sanctioned and that the properties supplied as safety had been overvalued.
Aggrieved by the Excessive Courtroom’s resolution to uphold the conviction rendered by the trial courtroom, the Appellant moved to the Supreme Courtroom.
Setting apart the conviction, the judgment authored by Justice Chandran mentioned that CBI didn’t deliver on file convincing proof connecting Appellant with any alleged misappropriation or fraudulent exercise.
It noticed that allegations that A2 had bought properties or acted as a intermediary within the names of A4 and A5 didn’t set up the prosecution case towards Appellant.
The Courtroom was significantly vital of the way through which the CBI had constructed its case.
“A2 is alleged to have bought quite a lot of properties or acted as a intermediary, within the identify of A4 and A5 or by himself, however that doesn’t show the prosecution case as towards A1…A4 & A5 had been home helps of A2, that the loans sanctioned had been in truth appropriated by A2, that the mortgaged properties had been overvalued, that A1 sanctioned the loans illegally are all simply figments of creativeness. The CBI has failed miserably in not solely proving its case but in addition in framing the case,” the Courtroom noticed.
One other key challenge was the alleged overvaluation of properties mortgaged towards the loans. The Courtroom noticed that the prosecution had produced just one valuation certificates and had not produced contemporaneous sale deeds or government-fixed market values displaying what the properties had been really price when the loans had been sanctioned in 1991-92. The properties had been auctioned almost 20 years later, in 2010.
Importantly, the Courtroom famous that the financial institution had recovered the mortgage quantities by the public sale of the mortgaged properties. In some cases, the public sale proceeds considerably exceeded the quantities appropriated in direction of the loans. The Courtroom expressed concern that extra cash remained with the financial institution with out steps being taken to determine and pay the authorized heirs.
Consequently, the enchantment was allowed.
“We discover completely no cause to maintain the conviction of the accused and put aside each the orders of the Trial Courtroom and the Excessive Courtroom. The accused, if in custody, shall be launched forthwith, if not required in every other case and if the accused is already launched on bail, the bail bonds shall stand cancelled.”, the Courtroom ordered.
The Courtroom has however saved the matter alive for a restricted function. It directed the Department Supervisor of Indian Financial institution’s Anna Nagar department to submit a report on the mortgage accounts, the restoration of the dues and the utilisation of the cash acquired from the public sale of the mortgaged properties. The financial institution has additionally been directed to provide the related title deeds.
The case will subsequent be listed on October 5, 2026, for the Courtroom to look at the financial institution’s report and challenge additional instructions regarding the extra public sale proceeds.
Trigger Title: V. Balakrishnan Versus State
Quotation : 2026 LiveLaw (SC) 882
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For Appellant(s) : Mr. S. Nagamuthu, Sr. Adv. Mr. M.P. Parthiban, AOR Ms. Priyaranjani Nagamuthu, Adv. Mr. Bilal Mansoor, Adv. Mr. Shreyas Kaushal, Adv. Mr. S. Geyolin Selvam, Adv. Mr. Alagiri Okay, Adv. Mr. Abhishek S, Adv.
For Respondent(s) : Mr. Davinder Pal Singh, A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. Shubham Prakash Mishra, Adv. Mr. Khushal Kolwar, Adv. Mr. Abhinav Mishra, Adv. Mr. S.N.Terdal, AOR
